Fundamental analysis
MOD specializes in and manufactures cooling and heating components for various machines, mainly automobiles, trucks, buses and agricultural equipment. It also manufactures heat exchange machines (heat pumps, fans) for use in industrial centres and data centres.
The company is undergoing an internal change, trying to implement a new strategy and decision-making process called “80/20”. This is a simplified internal decision-making process where a smaller team of people work on each task and are fully dedicated to it. Furthermore, MOD is trying to reach new markets with its products, especially the electric mobility segment. The company plans to continue optimizing its decision-making processes and wants to focus more on its core markets and products (cooling technologies).
The manufacturing sector PMI has been steadily declining for several months in a row. Automotive manufacturing is no exception. On the other hand, electric mobility and electric cars are a new and emerging segment.
Over the past 1 year, the share price has risen 170% despite the adverse global developments in the manufacturing segment.
The company’s gross margin is about 18%.
Turnover has been growing steadily for the last 10 years. The company is steadily profitable except for the covid years 2020 and 2021.
Results
For the quarter, sales are up 15% and EBITDA is up 91% to $80.4 million.
The Company is continuously acquiring additional companies to complement its product portfolio. In July, it completed the acquisition of Napps Technology (small indoor air cooling machines).
The company has been successful in selling data center equipment, with current sales of $68 million double the previous year. MOD is growing in all its major markets except the heating segment.
The company expects sales to grow 6-11% by the end of the year, but EBITDA will grow 32-39% due to higher margins.
Technical analysis
The company has been in an uptrend for more than one year according to moving averages. For the last three months, SMA 50 has been acting as a resistance from which the price has been bouncing.
Volume has risen above the average for the last three months, MOD is a sought after and traded stock.
RSI is oscillating at and below the overbought zone. This is due to the rapid rise in the stock. Now the momentum has fizzled out, the RSI is in the neutral zone.
The stock is at all-time highs, important resistances are at prices around $40.
Conclusion
MOD is well on its way to a successful year, confirming that the internal changes made within the company were the right move. The company is increasing its margin and sales turnover, succeeding in entering new markets and innovating its products. The share price reflects this. It has reached and surpassed its own high several times. Technical analysis points to further upside, but the RSI is near the overbought zone. This may point to a possible halt in growth.